§ Mr. Greenasked the Chancellor of the Exchequer what action he proposes to take on the recommendation of the Royal Commission on the Taxation of Profits and Income that a person who makes a covenant in favour of a member of his family and claims tax relief in consequence should be required by statute to produce declarations by himself and the beneficiary as to the absence of any agreement or understanding for the return, direct or indirect, of any part of the benefit.
§ Mr. SimonMy right hon. Friend is advised that as the law stands the existence of conditions or counter-stipulations in regard to payments under any deed of covenant, whether the beneficiary is a member of the covenantor's family or not, prevents the deed from operating as a valid transfer of income for tax purposes. In my right hon. Friend's view, therefore, no legislative action is necessary. However, the Board of Inland Revenue propose to instruct Inspectors of Taxes to call for declarations bearing on this point in the case of such deeds as part of the evidence required in support of a claim for tax relief, whether or not the covenantor and the beneficiary are related.